Decentralized hash rate a healthy sign for long-term sustainability of the digital currency

According to a February 6, 2019, report published by Canadian wealth management firm Canaccord, Bitcoin mining business has become more decentralized and is expected to diversify in the near future.

Bitcoin is Not Centralized

In recent times, fears related to the centralization of Bitcoin mining power have raised a lot of eyebrows among the believers of the technology. The centralization of Bitcoin hash rate with mining behemoths like Bitmain is a cause for many in the industry as it runs against the very foundation of the idea of a decentralized, peer-to-peer, trustless digital currency.

In fact, reports emerged last year how the Chinese digital currency mining giant is at a whisker’s distance from the fatal 51 percent hash rate mark. Having control on more than half the hashrate of a blockchain network could result in dire consequences. The 51 percent or double-spend attack orchestrated on the Ethereum Classic blockchain is a prime example of this.

However, the report by Canaccord paints an entirely different picture of the Bitcoin mining industry. Per the report, there has been an increasingly wide distribution of Bitcoin’s hash rate over the past five years.

The report notes that diversification of mining hash rate among a large network of systems is a healthy sign for Bitcoin in the long run.

Crunching the Stats

Per the report’s data, the Ghash.io mining pool controlled around half the hash rate market in 2014. However, in 2019, no single mining pool exercises control on more than 19 percent of hash rate.

Unsurprisingly, Antpool remains the largest hash rate stakeholder today. For the uninitiated, Antpool, along with ViaBTC belongs to Bitmain.

It’s worth highlighting that the major sources for data do not corroborate with regard to statistics about many pools.

Data reported by Blockchain.com, one of the largest wallets for cryptocurrencies states that Antpool currently controls about 10.5 percent of the global Bitcoin hash rate, while Bitaps notes that the figure is somewhere close to 8.5 percent.

Of a truth, the hash rate distribution has improved considerably since the plunge in the value of cryptocurrencies observed during mid-November 2018. The massive fall in the value of digital currencies forced many miners in the industry to throw in the towel due to the inability to cover the costs of running energy-intensive mining equipment.

The free fall movement of cryptocurrencies had a direct impact on Bitmain as well. Soon after the fall, the company’s IPO fell into jeopardy. The Chinese firm was also forced to reshuffle its top management due to dipping profits.

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After having worked at an IT consultancy as an SAP Finance/FSCM consultant for more than two years, Aisshwarya switched to the decentralized world of cryptocurrencies and the blockchain technology. Currently, Aisshwarya works as the Chief Editor at Blockchain Reporter.

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